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Merit Medical (MMSI) Up 18.4% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Merit Medical (MMSI - Free Report) . Shares have added about 18.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Merit Medical due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Merit Medical Q1 Earnings & Revenues Beat Estimates

Merit Medical Systems reported first-quarter 2020 adjusted earnings per share  of 38 cents, which beat the Zacks Consensus Estimate of 27 cents by 40.7%. Moreover, the bottom line rose 2.7% from the year-ago quarter.

On a GAAP basis, loss per share came in at 6 cents, compared to earnings per share of 11 cents from the year-ago quarter.

Revenues in Details

This Utah-based provider of peripheral and cardiac intervention products reported worldwide revenues of $243.5 million, up 2.2% from the year-ago quarter. On a comparable constant-currency basis, the figure improved 3% year over year. Moreover, the top line surpassed the Zacks Consensus Estimate of $231.6 million by 5.2%.

The Cardiovascular unit reported first-quarter revenues of $235.5 million, up 2.2% year over year. The upside can be attributed to a year-over-year increase of 2.9% in the segment’s Peripheral Intervention revenues to $87.1 million. Further, revenues from Cardiac Intervention improved 0.1% to $72.6 million. Moreover, revenues from Custom Procedural Solutions climbed 3.8% to $47.6 million.Also, OEM revenues increased 3% to $28.3 million.

Endoscopy Devices

Revenues from the Endoscopy devices totaled $7.9 million, up 1.4% year over year.

Margins

In the quarter under review, gross profit totaled $103.8 million, down 0.8% on a year-over-year basis. Gross margin came in at 42.6% of net revenues, down 128 basis points (bps) year over year.

Merit Medical registered selling, general and administrative expenses of$78.8 million, up 0.6% year over year.

Meanwhile, research and development expenses amounted to $14.9 million, down 6.9% year over year.

Adjusted operating margin in the quarter came in at 4.1%, showing a contraction of 3,302 bps year over year.

Financial Update

Cash and cash equivalents for the quarter came in at $50.1 million, up from $44.3 million at the end of 2019.

2020 Guidance

Due to the economic uncertainty and rapid change in the global environment on account of the coronavirus pandemic, the company has withdrawn its 2020 guidance. The company has also decided to not issue any financial outlook for the remainder of 2020.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -89.28% due to these changes.

VGM Scores

At this time, Merit Medical has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Merit Medical has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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